Berkeley Lab Illuminates Price Premiums for U.S. Solar Home Sales - Largest-ever study quantifies the value of rooftop photovoltaics on homes that sold across eight states and 15 years

A multi-institutional research
team of scientists led by the U.S. Department of Energy’s Lawrence
Berkley Laboratory (Berkeley Lab), in partnership with Sandia National
Laboratories, universities, and appraisers found that home buyers
consistently have been willing to pay more for homes with host-owned
solar photovoltaic (PV) energy systems —averaging about $4 per watt of
PV installed—across various states, housing and PV markets, and home
types. This equates to a premium of about $15,000 for a typical PV
system. The team analyzed almost 22,000 sales of homes, almost 4,000 of
which contained PV systems in eight states from 1999 to 2013—producing
the most authoritative estimates to date of price premiums for U.S.
homes with PV systems.

“Previous studies on PV home premiums have been limited in size and
scope,” says Ben Hoen, the lead author of the new report. “We more than
doubled the number of PV home sales analyzed, examined a number of
states outside of California, and captured the market during the recent
housing boom, bust, and recovery.”

More than half a million U.S. homes had PV as of 2014, and the number
is growing rapidly. The growth in home PV systems means that the real
estate industry will need reliable methods to value these homes
appropriately. Further, having greater certainty in those methods will
likely facilitate additional growth in the residential PV market.

Hoen is a researcher in the Environmental Energy Technologies
Division of Berkeley Lab, who collaborated with researchers from
Adomatis Appraisal Services, Real Property Analytics/Texas A&M
University, University of California at San Diego, San Diego State
University, and Sandia National Laboratories.

The study also found only a small and non-statistically significant
difference between PV premiums for new and existing homes. Additional
findings include the existence of a PV “green cache” (home buyers paying
a certain amount for a PV system of any size and incrementally more as
system size increases) and an apparent sharp depreciation rate for the
PV premium in home sales transactions as those PV systems age. The study
also finds that market premiums are statistically similar to those
estimated using the income and cost approaches, methods familiar to
appraisers. This similarity to standard appraisal practices further
bolsters the report’s usefulness to real estate professionals and
markets.

Additional Information:

Download the new 2015 report, “Selling into the Sun: Price Premium
Analysis of a Multi-State Dataset of PV Homes”, as well as a fact
sheets, and a summary slide deck here.

“As PV systems become more and more common on U.S. homes, it will be
increasingly important to value them accurately, using a variety of
methods,” says co-author Sandra Adomatis, an appraiser who helped
develop the Appraisal Institute’s Green Addendum and who has written and
spoken extensively on valuing green features. She noted, “Our findings
should provide greater confidence that PV adds a quantifiable premium to
a wide variety of homes in California and beyond.”

The research was supported by funding from the U.S. Department of Energy SunShot Initiative. The SunShot Initiative
is a collaborative national effort that aggressively drives innovation
to make solar energy fully cost-competitive with traditional energy
sources before the end of the decade. Through SunShot, DOE supports
efforts by private companies, universities, and national laboratories to
drive down the cost of solar electricity to $0.06 per kilowatt-hour.
Learn more at energy.gov/sunshot.

# # #

Lawrence Berkeley National Laboratory addresses the world’s most
urgent scientific challenges by advancing sustainable energy, protecting
human health, creating new materials, and revealing the origin and fate
of the universe. Founded in 1931, Berkeley Lab’s scientific expertise
has been recognized with 13 Nobel prizes. The University of California
manages Berkeley Lab for the U.S. Department of Energy’s Office of
Science. For more, visit www.lbl.gov. DOE’s Office of Science is the single largest supporter of basic
research in the physical sciences in the United States, and is working
to address some of the most pressing challenges of our time. For more
information, please visit science.energy.gov.

U.S. Department of Energy Lawrence
Berkley Laboratory, in partnership with Sandia National
Labs

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Environmental Valuation & Cost Benefit News covers legal, academic, and regulatory developments pertaining to the valuation of environmental amenities and disamenities, such as clean air, trees, parks, congestion, and noise. We apprise the reader about ways in which costs and benefits are measured, and the results of empirical studies. We hope that this information will allow public and private organizations to comprehend the risks and benefits of various actions, help disputants to resolve conflicts equitably and efficiently, and improve the quality of public policies.

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